Opportunity of social mobility great in Scandinavia

Bar chart: Michael Rogers Intergenerational persistence of incomes for 11 developed countries.

Bar chart: Michael Rogers
Intergenerational persistence of incomes for 11 developed countries.

M. Michael Brady
Asker, Norway

Economic opportunity and upward mobility now seem elusive in face of increasing inequality in high-income countries. Why that is so has recently been the object of much research. The resultant comparative rankings of the social mobility of countries imply that the Scandinavian countries offer greater opportunity than most others.

Social mobility in a society is usually expressed in terms of its opposite, the intergenerational persistence of income, which is the likelihood that someone will inherit their parents’ relative income level.

The intergenerational persistence of income is measured by a statistical measure called the intergenerational income elasticity (IIE), which expresses the relationship between the incomes of fathers and the incomes of their sons. In a country with high intergenerational income elasticity, financial standing tends to be passed on from generation to generation. In a country with low intergenerational income elasticity, the persistence of financial standing is weaker and social mobility hence greater.

The Organization for Economic Cooperation and Development (OECD) published a report of a study of that issue in 2010 (Further reading). In it, intergenerational income elasticity was found to be high in the UK and the U.S. and low in the Scandinavian countries. Today that means that the Scandinavian countries plus Australia and Canada have the most mobile societies.

Much of the data used in the OECD study came from the Economic Mobility Project conducted by University of Ottawa labor economist Miles Corak. Professor Corak’s data also contributed significantly to the “Great Gatsby Curve,” first presented in 2012 by economist Alan Krueger (Further reading), Chairman of the American president’s Council of Economic Advisors.

Named for F. Scott Fitzgerald’s 1922 novel, the “Great Gatsby Curve” is a graphic plot that illustrates the relationship between inequality and mobility in the U.S. and 12 other developed countries.

Other economists have also probed the threat to the middle class and the economy as a whole. In a book published September 2013 (Further reading), George Mason University cultural economist Tyler Cowen predicts that the ever faster changing world of work and wages signals an end to the American dream. No longer will hard work trample a path to prosperity. The elite of the future will comprise those who master tomorrow’s technologies, and the young will struggle in a labor market that rewards brains over brawn. The comfortable security of an average life somewhere in the middle of the spectrum of wealth is over.

In Norway, University of Bergen sociologist Johannes Hjellbrekke warns against broad generalizing on the basis of comparisons of intergenerational income. He believes that “Norwegian society is more open than many others, but class demarcations also are clear here. Including investment earnings and the income of both parents would lower the assessment of social mobility in Norwegian society.” (Further reading).

Despite predictions and warnings, renowned weekly The Economist argued in 2006 that “inequality is not inherently wrong—as long as three conditions are met: first, society as a whole is getting richer; second, there is a safety net for the very poor; and third, everybody, regardless of class, race, creed, or sex, has an opportunity to climb up through the system.”

Further reading:
• “Intergenerational Social Mobility in OECD Countries” by Orsetta Causa and Åsa Johansson, OECD Journal: Economic Studies, Volume 2010, 44 page PDF.

• “Income Inequality, Equality of Opportunity, and Intergenerational Mobility” by Miles Corak, Journal of Economic Perspectives, 27(3), 2013, pp 79-102.

• “Inequality from generation to generation: the United States in Comparison” by Miles Corak, WordPress.com 2012.

• “The Rise and Consequences of Inequality,” speech delivered by Alan Krueger, 12 January 2012.

Average is Over by Tyler Cowen, New York, Dutton Books, 2013, 304 pages hardcover, ISBN 978-0525953739.

Sosial mobilitet (“Social mobility”) by Johannes Hjellbrekke and Olav Korsnes, Oslo, Det Norske Samlaget, 2012, 199 pages softcover, ISBN 978-82-521-7942-2 (in Nynorsk).

M. Michael Brady was educated as a scientist and with time turned to writing and translating.

This article originally appeared in the Aug. 28, 2015, issue of the Norwegian American Weekly.

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